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Duke  University  Libraries 

Speech  of  Hon. 
Conf  Pam  #635 


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.     /J  SPEECH  OF 

HON.  W.  S.  OLDHAM, 

OP   TEXAS, 

ON  THE  SUBJECT  OF  THE  FINANCES. 


SENATE,  December  23, 1863. 

Mr.  OLDHAM  submitted  the  following  resolution  : 

Resolved,  That  the  Committee  on  Finance  be  instructed  to  inquire  into  the 
experiiency  of  so  amending  the  act  of  Congress  entitled  "  An  Act  to  lay  taxes 
for  the  common  defence  and  carry  on  the  Government  of  the  Confederate 
States,"  approved  April  24,  1863,  as  to  provide  for  laying  and  collecting  taxes, 
for  the  year  1S64,  to  the  amount  of  millions  of  dollars,  to  be  laid  upon 

the  subjects  of  taxation,  as  follows,  to  wit : 

1.  Upon  all  Treasury  notes,  designated  by  the  Secretary  of  the  Treasury  as 
"general  currency,"'  outstanding  on  ike  first  day  of  January,  1S6'1,  fifty  per 
cent. 

2.  Upon  all  olher  Treasury  notes  and  call  certificates,  twenty-five  per  cent. 

3.  Upon  all  eight  per  cent.  Confederate  bonds,  twenty  per  cent.;  upon  seven 
percent,  bonds,  fifteen  per  cent.;  upon  six  per  cent,  bonds,  ten  per  cent.;  and 
upon  all  other  bonds,  five  ]ierrent. 

4.  And  upon  all  other  subjects  of  taxation  specified  in  said  act,  as  will  be 
sufficient  to  raise  the  aforesaid  sum  of  millions,  grading  the  same  in 
proporti(n}  to  the  ability  of  the  classes  taxed  to  pay  their  assessment. 

And  as  a  means  of  sustaining  any  new  issue  of  Treasury  notes,  which  may 
be  made  hereafter,  the  propriety  of  inserting  the  following  stipulation  in  sa.d 
notes:  "  That  the  same  shall  be  receivable  in  payment  of  taxes  and  other 
public  dues,  at  their  current  value,  and  the  same  shall  be  funded  by  the 
holder  in  the  six  per  cent,  bonds  of  the  Government,  after  publication  of  no' 
tice  by  the  Secretary  of  the  Treasury." 

Mr.  OLDHAM  said : 

Mr.  President — It  is  with  great  diffidence  that  I  venture  to  propose  a 
scheme  for  the  relief  of  our  finansial  embarrassments;  nor  would  1  a<j  sj, 
but  that  I  rocognize  my  full  share  of  the  responsibility  resting  upon  Con- 
gress for  the  adoption  of  proper  remedies  for  existing  evils.  Another  rea- 
son also  actuates  me.  I  disagree  essentially  and  fundamentally  with  every 
scheme,  which  has  come  under  my  observation,  except  that  presented  by 
the  Senator  from  Tennessee  (Mr.  Henry),  and  especially  do  I  disagree  with 
that  proposed  by  the  Secretary  of  the  Treasury.  I  have,  therefore,  felt  is 
due  to  myself  to  offer  the  resolution,  which  I  have  done.  Having  offerel 
it,  I  would  let  it  go  to  the  Committee  on  Finance,  without  remark,  but  for 
the  radical  difference  between  it  and  all  other  plans,  except  the  one  in- 
dicated. 


That  radical  difference  consists  in  this,  that  all  the  schemes  proposed  are 
based  upon  one  of  two  fundamental  principles  :  funding  the  redundant  cir- 
culation in  interest-bearing  bonds,  with  the  object  to  improve  the  value  of 
the  currency ;  or  taxation,  with  the  object  to  sustain  the  public  credit,  and 
incidentally  to  improve  the  currency.  The  funding  principle  presupposes 
the  main  evil  to  be  the  depreciated  currency ;  the  taxing  principle  presup- 
poses an  impaired  public  credit  as  the  main  evil,  as  evidenced  by  the  de- 
preciation of  Treasury  notes  as  a  currency. 

The  plans  offered  by  the  Senator  from  Tennessee  and  myself,  are  founded 
upon  the  principle  of  taxation — all  others  upon  that  of  funding. 

In  my  opinion,  the  evil  existing  is  an  impaired  public  credit,  occasioned 
by  a  redundant  issue  of  Treasury  notes,  as  evidenced  in  the  cost  of  supplies 
to  the  government,  when  purchased  with  that  form  of  credit,  and  by  the 
value  placed  upon  those  notes  by  the  people  as  a  circulating  medium.  I  do 
not  believe  that  a  want  of  confidence  in  our  success  in  the  war  in  which  we 
are  engaged,  or  in  the  ability  of  the  government  eventually  to  redeem  its 
obligations,  has  contributed,  but  in  a  very  slight  degree,  to  impair  the  pub- 
lic credit,  but  that  it  has  resulted  from  other  causes.  If  we  had  no  war» 
and  the  same  amount  of  Treasury  notes  had  been  issued,  the  same  causes 
existing  to  affect  their  value,  the  depreciation  wouldj  in  my  opinion,  have 
been  very  nearly  as  much  as  it  is  at  present.  But  under  existing  circum- 
stances the  evil  affects  the  credit  of  the  government,  and  a  remedy  should 
be  applied  which  will  not  contribute  to  impair,  but  to  strengthen  and  sus- 
tain it. 

I  shall  endeavor  to  show,  that  the  public  credit  has  not  been  impaired  by 
a  want  of  confidence  of  success,  or  of  ability  to  redeem  its  obligations,  but 
by  a  redundant  issue  of  Treasury  notes,  as  already  stated. 

The  value  of  a  currency,  like  every  other  marketable  commodity,  is 
regulated  and  governed  by  the  law  of  supply  and  demand. 

The  depreciation  of  our  Treasury  notes  has  resulted,  mainly,  from  a  vio- 
lation of  that  law :  a  redundant  supply,  and  a  reduced  demand,  other 
causes  concurring  to  make  the  depreciation  still  greater. 

While  we  have  been  flooding  the  country  with  a  redundant  issue  of  Trea- 
sury notes,  demanded  by  our  military  operations,  without  adopting  any  ap- 
propriate and  efficient  measures  to  redeem  and  extinguish,  or  to  absorb  and 
retire  the  surplus  above  the  business  wants  of  the  country,  we  lost  sight  of 
the  fact,  that  the  condition  of  the  country  had  reduced  the  demand  for 
money  far  below  the  ordinary  business  standard. 

I  will  enumerate  some  of  the  causes  that  produced  that  result :  1st.  The 
suspension  of  the  laws  for  the  collection  of  debts,  by  the  Legislatures  of  the 
several  States,  thereby  relieving  debtors  from  all  necessity  for  effort  to  pay 
the  very  large  private  debt  owing  in  the  Confederacy.  2d.  The  blockade  of 
our  ports  by  the  enemy,  resulting  in  the  stoppage  of  our  foreign  commerce, 
and  the  internal  trade  dependent  upon  it.  3rd.  The  annihilation,  by  the 
war,  of  the  immense  trade  existing  before  that  time,  between  the  States  of 
the  South  and  those  of  the  North.  And  4th.  The  confiscation  of  all  debts 
due  by  our  citizens  to  alien  enemies,  with  the  postponement  of  payment, 


tintil  after  the  close  of  the  war.  The  destruction  of  our  foreign,  and  the 
internal  trade  dependent  upon  it,  with  the  suspension  of  the  pajment  cf 
all  debts,  have  reduced  the  demand  for  money  far  below  the  amount  which 
would  be  required,  if  those  causes  did  not  exist. 

It  is  assumed  by  the  Secretary  of  the  Treasury,  that  the  business  of  the 
Confederacy  requires  a  circulating  medium  of  the  value  of  two  hundred 
millions  of  dollars.  But  I  apprehend  that  this  assumption  has  reference  to 
an  active  and  healthy  business  condition ;  the  courts  open  the  payment  of 
debts  enforced,  with  an  active  foreign  and  domestic  commerce  existing.  If 
80,  then  a  much  smaller  sum  would  suflBce  under  existing  circumstances, 
with  all  trade,  foreign  and  domestic,  annihilated,  and  all  pre-existing  in- 
debtedness as  it  were  sponged  out.  I  think  it  may  be  safely  assumed,  that 
a  circulation  of  fifty  millions  of  dollars  would  supply  the  demand  required 
for  all  legitimate  business  transactions.  Taking  gold  as  the  standard,  the 
correctness  of  this  assumption  is  proven  by  the  relative  value  between  it 
and  Treasury  notes.  The  average  relative  value  between  them,  throughout 
the  Confederacy,  is  about  fourteen  to  one — at  some  places  more,  at  others 
less,  local  causes  and  circumstances  controlling.  It  is  shewn  by  the  report 
of  the  Secretary  of  the  Treasury,  that  there  is  outstanding  seven  hundred 
millions  of  dollars  of  Treasury  notes,  which  bear  the  same  relation  to  fifty 
millions  :  fourteen  to  one. 

It  is  an  axiom  of  political  economy,  that  after  the  circulating  medium 
has  reached  the  amount  demanded  by  the  business  of  a  country,  an  in- 
crease of  quantity  will  not  produce  a  corresponding  increase  of  value — that 
only  a  certain  quantity  of  currency  can  be  kept  at  par,  and  that  every  dol- 
lar of  excess  only  contributes  to  swell  the  volume,  without  increasing,  but 
rather  decreasing,  the  aggregate  value,  until  it  becomesso  inflated  that 
confidence  in  its  redemption  is  lost,  when  the  bubble  bursts,  and  the  whole 
becomes  valueless  waste  paper. 

Thus,  while  the  causes  I  have  enumerated  have  reduced  the  demand  for 
money  from  two  hundred  millions  to  fifty  millions  of  dollars,  we  have  en- 
larged the  supply  to  seven  hundred  millions.  The  consequences  which 
have  followed  are  the  certain  results  of  the  violation  of  an  immutable  law 
of  finance. 

"While  these  primary  causes  have  been  operating  to  produce  this  great 
disparity  between  the  supply  and  demand  of  currency,  and  its  consequent 
depreciation,  other  lateral  causes  have  conspired  to  the  same  result.  Amongst 
those  I  may  enumerate  the  contraband  trade  carried  on  by  persons  in  the 
Confederacy  with  the  enemy,  and  the  smuggling  of  goods  from  the  United 
States  into  our  country — the  character  of  trade  carried  on  by  blockade  run- 
ners, and  the  trade  through  Texas,  across  the  Rio  Grande,  controlled  by 
military  regulations. 

Neither  of  these  trades  can  be  carried  on  without  a  medium  of  exchange, 
which  Treasury  notes  do  not  constitute.  The  most  of  the  shipments  of  pro- 
luce  are  on  government  account,  or  used  in  purchasing  government  sup- 
plies by  individuals.  At  any  rate,  but  a  very  small  amount  is  used  in 
purchasing  the  goods  imported  and  sold  to  the  people.    The  goods  brought 


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into  the  country  are  sold  to  the  people  for  Confederate  notes,  which  are  ex- 
changed for  gold,  State  Btocks,  or  green-backs,  and -sometimes  cotton  or  to- 
bacco. Confederate  notes  constitute  a  local  currency,  and  cannot  be  made, 
the  medium  of  exchange  fcr  a  foreign  commerce.  Whenever  a  local  cur- 
rency is  forced  in  contact  with  a  foreign  market,  either  in  the  purchase  of 
goods,  gold,  or  exchange,  it  must  inevitably  suffer,  as  ours  has  done — de- 
preciation. Goods  purchased  in  a  foreign  market  must  be  paid  for  in  funds 
at  par,  or  at  least  'Current,  at  the  place  of  purchase,  or  in  bills  drawn 
against  shipments  of  produce  exported,  which  is  substantially  the  same 
thing  ;  therefore,  whenever  there  is  an  over-supply  of  a  local  currency,  and 
it  is  forced  into  the  purchase  of  exchange  based  upon  limited  exportation, 
or  in  drawing  specie  from  the  secret  vaults  to  which  it  has  retired,  fui'ther 
depreciation  must  follow,  and  the  currency  continue  to  sink  like  lead  in  the 
water.  And  then  the  premiums  paid  fix  the  relative  value  between  gold 
and  the  looal  currency  not'only  in  that  case,  but  eventually  in  all  others. 

In  consequence  of  the  depreciation  of  the  currency,  and  the  opportunity 
afforded  and  profits  accruing  from  blockade  rnnriing  and  trading  with  the 
enemy,  a  most  vicious  and  excited  spirit  of  speculation  has  been  engen" 
dered,  and  has  spread,  like  a  contagious  disease,  to  almost  all  classes — to 
merchants,  farmers,  mechanics,  landlords,  ofiicers  and  soldiers  in  the  army, 
and,  I  fear,  to  some  members  of  Congress, 

Hundreds,  if  not  thousands  of  persons,  have  been,  and  are  still  engaged 
in  running  the  blockade,  or  in  carrying  on  a  contraband  trade  with  the 
enemy  across  every  part  of  the  line  between  them  and  us,  at  New  York, 
Philadelphia,  Baltimore,  Louisville,  St.  Louis,  Nashville,  Memphis, 
New  Orleans,  and  other  places.  In  consequence  of  the  price  of  ex- 
change to  carry  on  this  trade,  the  goods  imported  are  sold  for  our  cur- 
rency, for  twenty,  forty,  and  sometimes  sixty  times  their  value  in  gold. 
This  exorbitant  price  for  imported  goods  has  produced  a  corresponding 
rise  in  the  price,  not  only  of  luxuries,  but  of  all  the  necessaries  of  life. 
The  farmer  demands-ten  or  twenty  prices  for  beef,  pork,  bacon,  corn,  flour, 
and  every  other  commodity  of  like  character,  because  the  merchant  exacts 
from  him  similar  prices  for  domestics,  calicoes,  hats,  boots,  shoes,  &c.  The 
landlord  in  town  charges  like  rates  for  rent,  because  of  the  charges  of  the 
merchants  and  farmers;  mechanics  do  the  same,  and  boarding  is  at  corres- 
ponding rates,  because  of  the  extortions  of  all  of  the  preceding  upon  the 
hotel  and  boarding-house  keepers.  And  lastly,  the  Government  becomes 
the  victim  of  all,  and  cannot  purchase  upon  credit,  with  its  notes  or  bonds, 
the  necessary  supplies  to  sustain  our  armies  in  the  field,  except  at  the  meet 
fabulous  rates.  The  malignity  and  spread  of  the  contagion  are  well  calcu- 
lated to  fill  the  unselfish  patriot  with  wonder  and  astonishment,  especially 
when  he  sees  men  either  concealing,  to  prevent  the  government  from  ob- 
taining, or  refusing  to  sell  for  less  than  ten  prices,  the  necessary  supplies 
to  feed  and  clothe  the  army,  composed  of  their  sons,  their  brothers,  and 
their  neighbors,  fighting  for  the  independence  of  their  country,  and  in  de- 
fence of  the  lives,  liberty  and  property  of  its  people.  A  strange  infatua- 
tion seems  to  possess  the  great  mass  of  the  people,  for  while  they  exact  the 


highest  prices  •with  all  the  tenacity  of  the  extortioner,  they  squander  their 
money  with  the  reckless  prodigality  of  the  spendthrift. 

While  all  these  causes  have  been  operating  to  depreciate  and  destroy  the 
credit  of  the  Government,  I  regret  to  say  that  I  understand  the  Government 
itself  has,  upon  several  occasions,  openly  entered  the  gold  and  exchange 
markets,  and  hawked  its  own  credit  to  bidders  composed  of  brokers,  shavers 
and  stock-jobbers. 

Another  cause  which,  in  my  opinion,  has  contributed  its  part  in  the  de- 
preciation of  the  currency,  is  one  which  was  originally  recommendpd  by  ' 
the  Secretary  of  the  Treasury,  and  adopted  by  Congress,  as  a  means  to  pre 
vent  that  result — I  mefn  the  system  of  funding  the  notes,  without  adequate 
provision  being  made  for  the  payment  of  the  interest  on  the  bonds.  Great 
importance  has  been  attached  to  that  pystem  as  a  means  of  absorption,  and 
therefore  of  support  of  our  currency,  by  preventing  a  redundancy.  I  never 
could  see  the  virtues  of  that  measure,  which  were  ascribed  to  it  by  its  ad- 
vocates. I  never  could  see  the  inducement  to  fund  an  uncurrent  note  in  an 
uucurrent  bond,  and  hence,  at  the  last  session  of  Congress,  I  said  that  the 
eSbrt  to  prevent  a  redundant  circulation,  by  funding  in  bonds,  without 
adequate  provision  for  the  payment  of  the  interest  on  the  bonds,  as  a  moans 
of  keeping  them  at,  or  nearly  at  par  value,  would  be  as  futile  as  an  attempt 
to  sail  a  boat  by  means  of  a  bellows  in  the  stern,  forgetting  that  the  laws 
of  action  and  reaction  are  equal ;  or  an  attempt  to  exhaust,  by  nleans  of  a 
siphon,  all  the  water  of  one  vessel  into  another  upon  an  equal  level,  in 
disregard  of  the  plainest  laws  of  natural  philosophy. 

I  claim  that  results  have  proven  the  correctness  of  my  opinions.  The 
expansion  of  the  currency  has  not  been  prevented  by  funding,  but  it  haa 
continued  to  swell  almost  to  the  point  of  explosion.  The  speculator,  the 
banker,  broker  and  shaver,  believing  that  the  public  debt  will  be  uUimate- 
ly  paid  in  full  in  gold  and  silver,  are  interested  in  obtaining  the  largest  pos- 
sible amount  of  it  for  the  very  smallest  possible  consideration.  Hence  they 
can  make  more,  by  first  depreciating  the  currency  as  low  as  possible,  then 
buying  it  up,  and  funding  it,  than  they  can  make  by  funding  so  as  to  prevent 
depreciation.  The  more  the  currency  becomes  depreciated,  the  less  a  bond 
will  cost,  and  hence  a  premium  has  been  held  out  as  a  standing  offer  to 
them  to  depreciate  the  currency. 

The  bankers,  brokers,  shavers  and  speculators  fix  the  value  of  currency, 
which  is  always  accepted  by  the  great  mass  of  the  people  without  investi- 
gation. They  can  fix  its  value,  for  a  time,  far  above  or  below  that  which 
the  demand  and  supply,  the  legitimate  regulators,  would  fix  it  at.  For  the 
reasons  already  given,  it  being  to  their  interest  to  obtain  the  largest  possi- 
ble amount  of  the  public  debt  for  the  smallest  possible  consideration,  with 
the  expectation  of  eventually  realizing  in  gold  its  full  value,  by  funding 
and  taxation  upon  the  people,  that  consideration  has  operated  upon  them  to 
depress  and  keep  down  the  value  of  the  currency.  I  sincerely  believe  that 
they  have,  from  motives  of  interest,  contributed  more  to  the  depreciation  of 
the  value  of  Treasury  notes,  than  the  whole  amount  funded  has  tended  to 
appreciate  their  value.    They  never  will  fund  voluntarily,  so  as  to  reduce 


PB28S4 


the  currency  to  the  proper  volume,  until  they  believe  that  the  government 
indebtedness  has  reached  the  utmost  limit  cf  the  ability  of  the  people  to 
pay  it. 

Wo  have  nearly  reached  that  point,  and  now  these  vampires,  who  have 
been  sucking  out  the  very  life-blood  of  the  country,  are  thrusting  before 
Congress  a  thousand  schemes  of  finance,  the  distinguishing  feature  of  every 
one  being  a  system  of  funding  in  interest-bearing  bonds,  with  a  plan  of 
taxation,  which  will  give  to  those  bonds  a  par  value  in  gold,  the  taxation 
so  assessed  as  to  exempt  them  and  their  ill-gotten  gains  from  any  part  of 
the  contributions. 

With  these  men  and  their  schemes  I  have  no  syajpathy.  There  are  but 
few,  if  any  of  them,  in  my  State.  Our  capitalists  (and  we  have  large  capi- 
talists there),  believe  that  legitimate  and  profitable  trade — speculation,  if 
you  so  please  to  call  it — can  be  carried  on  upon  principles  not  inconsistent 
with  the  high  dictates  of  honor  and  patriotism.  This  is  verified  by  the 
fact,  that  Confederate  notes  are  worth  fifty  per  cent,  more  there  than 
east  of  the  Mississippi  river,  while  we  have  a  larger  amount  of  that  cur- 
rency, in  proportion  to  populatioa  and  wealth,  than  there  is  on  this  side; 
and  while  we  also  have  a  vicious,  I  may  say  an  infamous,  cotton  trade 
across  the  Rio  Grande,  thrown  into  the  hands  of  Jews,  Yankees,  and  men 
from  this  side  of  the  river,  by  illegal  military  orders  and  restrictions. 

I  have  attempted,  Mr.  President,  to  point  out  the  causes  that  have  led 
to  our  deranged  financial  condition.  The  existence  of  the  most  of  them 
will  be  readily  admitted,  and  I  apprehend  the  like  existence  of  the  remain- 
der, with  the  effects  I  have  ascribed  to  them,  cannot  be  successfully  contro- 
verted. How  is  the  evil  to  be  remedied,  and  its  future  recurrence  success- 
fully provided  against?  The  answer  to  the  question,  in  general  terms,  is 
easily  given  :  remove  the  causes,  and  guard  against  them  for  the  future — 
reduce  the  supply  of  currency  and  increase  the  demand  for  money  on  the 
people,  so  as  to  make  the  demand  and  supply  correspond, — all  of  which 
should  be  done  for  the  support  of  the  credit  of  the  government,  as  the  main 
object,  affecting  the  currency  as  an  incidental  subject.  The  measures  to 
be  adopted,  which  shall  accomplish  these  desirable  results,  present  very 
difficult  and  interesting  questions. 

The  Secretary  of  the  Treasury  has  presented  us  with  a  financial  scheme, 
which  he  thinks  will  afford  the  proper-remedy.  Emanating  as  it  does  from 
the  head  of  the  Treasury,  for  that  reason  as  well  as  for  the  large  experi- 
ence and  high  character  for  financial  skill  of  the  gentleman  himself,  the 
measure  proposed  is  entitled-to  our  most  favorable  consideration,  and  should 
receive  our  most  patient  examination.  No  scheme,  however,  should  be 
adopted  because  of  the  source  from  which  it  may  have  come,  or  of  the  en- 
dorsements it  may  have  received.  Every  plan  should  stand  or  fall  upon  its 
intrinsic  merits. 

The  scheme  of  the  Secretary  of  the  Treasury  contains  the  following  sub- 
stantial provisions. 

1.  A  loan  of  one  thousand  millions  of  dollars  in  six  per  cent,  bonds,  the 
principal  payable  in  twenty  years,  the  interest  semi-annually,  to  be  extend- 


ed  from  time  to  time,  hereafter,  so  as  to  ■consolidate  the  whole  public  debt. 

2.  A  sale  by  the  Secretary  of  the  Treasury,  at  par,  of  as  many  of  said 
bonds  as  will  be  sufficient  to  take  up  the  outstanding  circulation  and  to 
pay  the  appropriations  made  by  Congress. 

3.  A  tax  of  five  per  cent-  upon  all  property  and  credits  (other  than  the 
•new  issue  of  notes  proposed)  which  may  be  held  on  the  first  day  of  April 
next,  to  be  paid  on  the  first  day  of  July,  one  half  in  Treasury  notes,  or  one 
half  in  coin,  or  in  the  coupons  of  the  bonds  issued  for  this  loan. 

4.  Within  sis  months  a  new  and  improved  issue  of  two  hundred  mil- 
lions of  dollars  in  Treasury  notes,  in  substitution  for  that  amount  of  old 
issues  to  be  cancelled,  with  a  pledge  of  the  faith  of  the  government  not  to 
increase  said  issues. 

5.  The  funding  of  the  entire  outstanding  circulation  of  Treasury  notes, 
on  or  before  the  first  day  of  April  next,  in  the  bonds  of  the  said  consolida- 
ted loan,  after  which  time  the  notes  not  so  funded  to  cease  to  be  current 
or  receivable  at  the  Treasury  for  dues. 

Thaie  are  the  substantive  features  of  the  scheme,  all  others  being  mat- 
ters of  detail. 

To  this  plea  the  following  insuperable  objections  present  themselves  to 
my  mind : 

1.  It  proposes  to  act  upon  the  currency  directly,  and  appreciate  it  by 
curtailing  the  redundancy  by  compulsory  funding  in  the  six  per  cent,  bonds 
of  the  government.  It  starts  out  upon  the  fundamental  error  that,  the 
subject  to  be  directly  aifected  is  the  currency,  and  incidentally  operating 
upon  the  credit  of  the  government;  whereas,  the  measures  to  be  adopted 
should  be  aimed  at  the  restoration  of  the  credit  of  the  government  directly 
and  incidentally  to  the  improvement  of  the  currency.  Congress  has  no 
power  whatever  over  a  paper  currency  per  s^  It  "  may  coin  money  and 
regulate  the  value  thereof" — but  it  is  well  understood,  that  this  power  has 
reference  to  money  coined  of  gold  and  silver.  It  has  no  power  over  the 
private  business  transactions  between  me  and  my  neighbor — or  to  make  a 
paper  currency  and  compel  us  to  receive  it — or  legislate  with  the  view  to 
regulate  the  value  of  that  currency  between  us — and  this  is  the  same  whe- 
ther the  currency  consists  of  bank  notes,  shin  plastert,  beef  hides,  peltries, 
coon  skins  or  its  own  notes.  Every  thing  that  beoomes  or  is  used  as  a 
currency,  except  gold  and  silver,  becomes  so,  by  the  mutual  consent  of  in- 
dividuals. 

The  power  to  issue  Treasury  notes  can  be  supported  only  by  the  authori- 
ty of  Congress  "  to  borrow  money."  When  this  power  is  exercised,  the 
form  of  the  evidence  of  the  debt  created,  is  left  discretionary — it  may  be 
in  the  shape  of  a  receipt,  a  bond,  or  Treasury  note.  Nor  is  it  requisite  to 
the  exercise  of  this  power,  that  money  shall  be  actually  and  absolutely 
borrowed.  Congress  may  borrow  money  of  A.  to  buy  supplies  for  the 
army  from  B.,  and  give  to  A.  Treasury  notes  as  evidences  of  indebtedness 
for  the  money  so  borrowed.  But  if  B.  is  willing  to  take  from  the  govern- 
ment the  Treasury  notes  for  the  supplies  furnished,  it  is  a  substantial  com- 
pliance "with  the  constitutional  provision,  to  deliver  the  notes  directly  to 


him.  Between  the  holder  and  the  .government  the  Treasury  notes  are  not 
money — but  evidence  of  indebtedness — premises  to  pay  in  consideration  of 
money  burrovred  or  of  supplies  purchased,  amounting  to  the  same  thing. 
By  consent  between  individuals,  they  may  become  a  currency,  and  their 
delivery  and  acceptance  amount  to  an  absolute  payment,  but  they  do  not 
become  so  by  virtue  of  any  power  of  Congress.  The  power  of  Congress  is 
over  the  credit  of  the  government,  and  should  be  exercised  with  direct 
reference  to  that  object,  incidentally  operating  upon  the  currency,  in  the 
same  manner  as  an  individual,  who  by  re-establishing  his  impaired  credit, 
enhances  the  value  of  his  outstanding  obligations. 

2.  The  scheme  proposed,  instead  of  restoring  and  sustaining  the  credit 
of  the  government,  would  weaken  and  impair,  and  eventually  destroy  it. 

The  public  debt,  exclusive  of  the  foreign  loan,  is  now,  in  round  numbers, 
about  eleven  hundred  millions  of  dollars.  The  taxes  for  the  present  year 
may  be  assumed  at  one  hundred  and  twenty  millions,  which  will  reduce 
the  debt  to  about  nine  hundred  and  eighty  millions.  Of  this  sum,  without 
being  definite,  I  may  state,  that  about  one  half  is  in  an  interest  bearing 
shape,  and  the  other  half  bearing  no  interest.  It  is  now  proposed  to  fund 
the  whole  of  this  debt  in  six  per  cent,  bonds,  which  will  bear  an  annual  in- 
terest of  fifty-eight  millions,  eight  hundred  thousand  dollars.  The  debt 
must  continue  to  grow  until  the  end  of  the  war,  when  it  will,  most  probably, 
amount  to  fifteen  hundred  millions — the  interest  upon  which  will  amount 
to  ninety  millions  of  dollars.  It  is  not  proposed  to  pay  one  dollar  of  the 
principal  of  this  already  enormous  debt — nor  prevent  its  rapid  future 
growth,  except  by  a  system  of  taxation,  which,  I  believe,  is  beyond  both 
the  ability  and  willingness  of  the  people  to  pay.  Under  the  weight  of  such 
an  existing  and  accumulating  debt,  bearing  such  a  ruinous  rate  of  interest, 
confidence  in  the  ability  of  tke  government  to  discharge  its  obligations,  must 
and  will  become  impaired,  and  its  credit  eventually  give  way  and  fail  en- 
tirely. Especially  will  that  be  the  case  should  the  people  fail,  through 
inability  or  unwillingness,  to  meet  the  taxes  imposed  upon  them. 

The  credit  of  a  nation  and  that  of  an  individual  are  governed  by  the 
same  immutable  laws,  are  upheld  or  destroyed  by  similar  causes.  What 
would  be  thought  of  a  man  who,  having  engaged  in  trade  with  an  unim- 
paired credit,  after  a  period,  finding  his  credit  so  shattered  that  he  has 
to  promise  ten  prices  for  everything  he  buys,  should  gravely  propose  to  his 
creditors,  as  a  means  of  re-establishing  that  credit,  to  surrender  their  non- 
interest  bearing  claims,  and  accept  his  notes,  bearing  a  rate  of  interest, 
■which  will  require  all  his  efi^orts,  and  perhaps  surpass  his  ability  to  pay, 
without  reference  to  the  principal  ?  No  prudent  man  would  trust  him  the 
more  readily  in  consequence  of  such  a  financial  operation,  but  would  re- 
gard his  rapid  insolvency  as  inevitable — and  so,  I  verily  believe  will  be  the 
consequences  of  this  funding  scheme,  if  adopted  by  Congress.  It  may 
produce  a  temporary  effect,  by  the  reduction  of  the  currency — but  as  time 
rolls  on,  as  the  war  progresses,  as  our  debt  continues  to  grow,  the  credit  of 
the  government  will  yield  by  degrees,  until  finally  it  will  sive  way  with  a 
crash,  scattering  bankruptcy,  ruiuand  desolation  through  the  land. 


To  fund  a  non-interest  bearing  debt,  in  the  shape  of  a  currency,  because 
of  its  depreciation,  is  the  very  worst  of  financiering.  The  government 
should  take  advantage  of  the  depreciation,  levy  the  heaviest  taxes,  and 
thus  compensate  itself  for  losses  sustained,  because  of  the  enhanced  cost  of 
supplies  caused  by  the  depreciation. 

A  stern  determination  to  pay  our  debt,  evinced  by  the  levy  and  collec- 
tion of  four  hundred  millions  of  our  depreciated  currency,  in  the  shape  of 
taxes,  will  be  vastly  more  efficient,  in  re-establishing  the  public  credit,  and 
restoring  the  currency  to  a  healthy  state^  than  the  funding  of  one  thousand 
millions  in  six  per  cent-  bonds.  Any  scheme  proposing  those  enil-!,  which 
does  not  comprehend  as  its  leading  feature  the  extinguishment  of  the 
debt  to  as  great  an  extent  as  possible,  and  the  prevention  of  its  overgrowth 
in  an  interest  bearing  shape,  must  result  in  failure. 

3.  The  system  of  taxation  proposed,  the  mode  of  assessment,  and  the 
circumstances  under  which  the  taxes  are  to  be  collected,  are  to  my  mind 
very  objectionable. 

It  is  proposed  to  levy  an  ad  valorem  tax  upon  all  property  and  credits 
(other  than  the  new  issue  of  notes)  which  may  be  held  on  the  first  of  April 
next,  to  be  paid  on  the  first  of  July  next,  one  half  in  Treasury  notes,  and 
one  half  in  coin,  or  in  the  coupons  of  the  bonds  issued  for  the  loan.  But 
"  in  case  the  coupons  should  advance  in  the  market  to  a  premium  exceed- 
ing twenty-five  per  cent,  any  tax-payer  shall  be  permitted  to  pay  his  tax  in 
Treasury  notes  of  the  new  issue,  with  twenty-five  per  cent,  added.  It  may 
be  observed  in  this  connection,  that  it  is  not  proposed  to  repeal  the  tax  law 
of  the  last  session  of  Congress,  but  to  collect  the  taxes  provided  for  by  that 
law  also.  It  is  estimated  that  a  five  per  cent,  ad  valorem  tax  will  yield  one 
hundred  and  twenty  millions  of  dollars,  that  the  taxes  under  the  act  of  the 
last  session  will  yield  a  like  sum,  making  two  hundred  and  forty  millions 
in  money,  to  which  is  to  be  added  the  value  of  the  tax  in  kind — which 
I  will  not  venture  to  estimate. 

As  an  argument  in  favor  of  the  proposed  ad  valorem  tax,  the  Secretary 
assumes,  as  a  fact,  that  land  and  negroes  are  not  taxed  under  the  existing 
law.  I  am  aware  that  this  erroneous  impression  prevails  to  a  considera- 
ble extent  among  the  people,  but  I  did  not  expect  to  hear  the  fact  asserted 
by  the  officer  who,  above  all  others,  should  possess  correct  information 
upon  the  subject.  It  will  be  seen,  by  reference  to  the  8th  section  of  the 
tax  act,  after  specifying  the  tax  upon  certain  incomes,  it  proceeds  to  specify 
the  tax  upon  "  the  income  derived  from  all  other  sources,"  and  in  that  con- 
nection it  is  declared  that  "  in  estimating  income,  there  shall  be  included 
the  value  of  the  estimated  annual  rental  of  all  dwellings,  houses,  buildings 
or  building  lots  in  towns  or  villages,  occupied  by  the  owners,  or  owned  and 
not  occupied  or  hired,  and  the  value  of  the  estimated  annual  hire  of  all 
slaves  not  engaged  on  plantations  or  farms,  and  not  employed  in  some 
business  or  occupation,  the  profits  of  which  are  taxed  as  income  under 
this  act."  Therefore,  every  citizen  who  derives  an  actual  income  from  the 
rental  of  real  estate  or  the  hire  of  negroes,  if  the  income  exceeds  five  hun- 
dred dollars  per  annum,  is  chargeable  with  the  tax  provided  by  the  law. 


10 

And  a  like  tax  is  levied  upon  the  estimated  value  of  the  incomes  of  per- 
sons derived  from  the  "  annual  rental  value  of  all  dwellings,  houses,  build- 
ings or  building  lots  in  cities,  towns  or  villages,  occupied  by  the  owner, 
or  owned  and  not  occupied  or  hired,  and  the  annual  hire  of  all  slaves  not 
engaged  on  plantations  or  farms,  and  not  employed  in  some  business  or  oc- 
cupation, the  profits  of  which  are  taxed  as  income,"  although  no  income 
may  be  derived  from  such  rental  or  hire. 

Negroes  engaged  on  plantations,  and  4he  plantations  themselves,  come 
under  the  provisions  of  the  law  levying  the  tax  in  kind.  A  negro  em- 
ployed on  a  plantation  may  produce  ten  bales  of  cotton  and  five  hundred 
bushels  of  corn  in  many  parts  of  the  country,  the  tax  upon  which  would 
be  one  bale  of  cotton  and  fifty  bushels  of  corn,  which,  according  to  present 
rates,  would  be  worth  at  least  four  hundred  dollars.  It  would  be  vain  to 
argue  with  the  owner  of  that  slave,  that  his  land  and  negroes  are  not  taxed. 
All  lands  and  slaves,  except  unproductive,  are  taxed,  not  directly,  but  in- 
directly, which  makes  no  very  substantial  difference  to  the  man  who  pays 
the  taxes. 

Upon  this  erroneous  assumption  of  a  legal  fact,  the  Secretary  proceeds 
to  make,  in  my  opinion,  a  very  unsound  constitutional  argument,  which  I 
will  not  attempt  to  answer. 

Mr.  President,  no  system  of  taxation  has  ever  been  devised,  which  is 
perfectly  uniform  and  just,  in  the  imposition  of  its  burthens  upon  all  the 
people.  I  am  not  at  this  time  prepared  to  deny  that,  in  a  state  of  peace  and 
business  prosperity,  every  citizen  devoted  to  his  individual  and  private 
pursuits  and  interests,  an  ad  valorem  tax  would  approach  as  near  to  uni- 
formity and  justice  as  any  other;  but  I  do  contend  that  in  the  present 
condition  of  our  country,  such  a  tax  would  be  the  most  unequal  and  un- 
just that  could  possibly  be  levied. 

Thousands  upon  thousands  of  our  most  wealthy  and  patriotic  citizens 
are  in  the  armj,  in  command  and  in  the  ranks,  devoting  their  time  and 
services  to  the  defence  of  our  country  and  the  liberties  of  our  people,  and 
■who  are  voluntarily  payfng  the  taxes  of  health,  blood  and  life  itself,  leav- 
ing their  property  at  home,  not  only  in  an  unproductive  condition,  but 
wasting  and  going  to  ruin  for  want  of  attention.  Another  large  class  have 
been  driven  from  home  into  exile  by  our  merciless  foes,  with  but  a  remnant 
of  their  property  saved,  and  which  is  at  present  more  of  expense  than 
profit  to  them — while  yet  another  class  is  at  home  nobly  performing  the 
part  of  unselfish  patriots,  neglecting  their  own  interests,  devoting  their  all 
of  property,  energy,  and  industry  to  the  maintenance  and  support  of  our 
army  in  the  field  and  the  cause  of  our  country.  And,  besides  these,  we 
have  still  another  class  who  have  been,  and  are  engaged  in  speculation  and 
extortion,  preying  upon  the  very  vitals  of  their  country — undermining  its 
credit  and  endangering  its  liberties,  and  who  have  increased  their  fortunes, 
some  a  hundred  and  some  a  thousandfold.  Would  it  be  right  or  just  to 
levy  an  ad  valorem  tax  equally  upon  all  the  property  of  those  classes  of 
persons,  and  especially  when  the  most  unworthy  class  are  to  be  the  beuefi" 
ciaries  ? 


11 

Can  the  people  pay  the  taxes  under  the  circumstances  proposed  ?  It  is  to  be 
borne  in  mind  that  the  entire  outstanding  circulation  of  Treasury  notes  are 
to  be  called  in  and  funded  in  bonds  by  the  first  day  of  April  next,  "  after 
which  they  shall  cease  to  be  current  or  receivable  at  the  Treasury  for 
dues,"  and  within  sis  months  a  new  issue  of  two  hundred  millions  of  dol- 
lars of  new  notes  is  to  be  made.  The  five  per  cent,  ad  valorem  tax  is  to  be 
assessed  on  all  property  and  credits  held  on  the  first  of  April  next,  and  to 
be  paid  on  the  first  of  July  next.  So  the  money  taxes  under  the  act  of 
April  last,  and  the  five  per  cent,  ad  valorem  tax,  amounting  to  the  sum  of 
two  hundred  and  forty  millions  of  dollars,  will  have  to  be  paid  out  of  two 
hundred  millions  of  circulation,  the  coupons  of  the  bonds  of  the  consoli- 
dated loan,  and  the  specie  which  is  hid  away  in  the  country.  It  would  be 
equivalent  to  collecting  the  whole  amount  in  specie.  I  do  not  fear  to  ven- 
ture the  assertion,  that  five  hundred  millions  of  dollars  could  more  easily 
be  collected  by  a  mere  enlargement  of  the  act  of  April  last  than  could  one 
hundred  and  fifty  millions  under  the  circumstances  proposed.  The  taxes 
are  to  be  levied  and  collected  in  total  disregard  of  the  laws  of  supply  and 
demand.  It  is  proposed  to  reduce  the  supply  down  to  the  ordinary  busi- 
ness standard,  and  then  enlarge  the  demand  far  beyond  the  capacity  of 
the  circulation  to  meet  it.  It  would  result  in  nothing  but  panic,  pressure 
and  bankruptcy — evils  as  much  to  be  dreaded  and  avoided  as  those  with 
which  we  are  afilicted  or  threatened. 

The  scheme  proposes  to  exempt,  upon  certain  conditions,  about  one-fifth 
of  the  entire  value  of  the  property  and  credits  of  the  country,  which 
should,  above  all  others,  be  taxed,  and  that  in  favor  of  a  class  of  property 
holders  who,  above  all  others,  have  the  least  claim  to  indulgence.  The 
bonds  issued  upon  all  deposits  made  in  January  next,  are  to  be  exempt 
from  the  tax ;  those  in  February  from  one-half,  and  in  March  one-fourth. 
This  sclieme  is  intended  to  increase  the  value  of  the  notes  so  deposited, 
and  metamorphose  into  bonds  to  fourteen  times  what  it  is  tiW.  The 
Treasury  notes,  or  at  least  the  far  larger  proportion,  are  held  by  specula- 
tors who  obtained  them  for  an  inadequate  consideration  ranging  from  one- 
half  to  one-twentieth  of  their  nominal  value.  No  doubt  but  all  the  large 
holders  will  take  advantage  of  the  conditions  offered  to  them. 

The  sum  and  substance  of  the  whole  scheme  is,  that  it  is  designed  to 
convert  our  entire  public  debt,  funded  and  unfunded,  into  six  per  cent, 
bonds,  with  such  a  system  of  taxation  as  will  make  them  worth  their  value 
in  gold  to  those  who  hold  them,  and  who  have  obtained  them  as  already 
stated,  for  from  one-half  to  one-twentieth  of  their  nominal  value.  Verily, 
our  Secretary  has  found  that  for  which  the  Alchemists  in  their  day  sought 
for  in  vain,  the  philosopher's  stone,  which  was  supposed  to  possess  the 
quality  of  converting  into  gold  every  substance  coming  in  contact  with  it. 
He  has  certainly  discovered  the  art  of  converting  our  depreciated  currency 
into  gold  in  the  hands  of  those  who  now  hold  it.  With  all  due  respect  for 
that  officer,  (and  I  have  for  him  a  very  high  regard,)  I  am  constrained  to 
say,  that  his  scheme  has  more  the  appearance  of  having  emanated  from  a 
board  of  bankers  or  stock  brokers,  than  from  the  study  of  a  philosophical 


12 

and  enlightened  statesman.  The  bankers,  the  hroters,  the  speculators  and 
the  extortioners,  the  present  holders  of  our  depreciated  credits,  have  been 
flooding  the  country  and  thrusting  into  the  face  of  Congress  their  financial 
schemes.  One  feature  pervades  them  all.  The  currency  must  become  gold 
in  their  hands  by  a  particular  system  of  funding,  follovred  by  taxation. 
There  was  a  time  when  an  efficient  system  of  funding  should  have  been 
adopted  and  enforced  to  prevent  depreciation,  to  the  injury  of  the  public 
credit.  Now,  when  the  evil  is  upon  us,  it  is  proposed  to  resort  to  it  to  re- 
store the  currency  in  the  hands  of  the  speculator  at  the  expense  of  the 
credit  of  the  government,  and  to  the  detriment  of  the  people. 

This  funding  system  has  operated  like  the  hot  water  draughts  adminis- 
tered by  Doctor  Sangrado  to  his  patients,  which  produced  weakness,  pros- 
tration, and  finally  death.  The  worse  the  patient  became,  the  more  hot 
water  was  administered  to  him.  We  have  funded  and  funded  until  we  are 
near  a  state  of  collapse.  The  treatment  must  be  changed  or  the  patient 
will  die.  The  attending  physicians,  it  is  true,  have  not  called  me  into  con- 
sultation ;  yet,  as  I  am  one  of  the  nurses,  having  witnessed  the  operation  of 
the  medicine,  and  closely  marked  the  symptoms,  I  have  ventured  to 
make  some  suggestions,  however  worthless  they  may  be  regarded  or  little 
heeded. 

I  have  said,  Mr.  President,  and  I  again  repeat  it,  that  any  scheme  which 
proposes  to  re-establish  the  public  credit  upon  a  solid  basis,  and  to  restore 
our  currency  to  a  healthy  condition  which  does  not  comprehend,  as  its 
leading  feature,  the  extinguishment  of  our  debt  to  as  great  an  extent  as 
possible,  preventing  its  accumulation  and  overgrowth  as  an  interest  bear- 
ing debt,  must  result  in  failure  and  disaster.  I  have  heard  it  said,  as  an 
excuse  for  not  providing  for  the  payment  of  any  part  of  our  debt,  that  no 
revolutionary  debt  was  ever  paid  during  the  war.  I  answer  that  the  same 
may  be  said  of  almost  all  war  debts — and  that  but  very  few  war  debts  have 
ever  been  paid  at  any  time.  National  debts  are  of  modern  invention,  and 
have  grown  up  within  the  last  two  centuries.  Before  that  time,  and  in 
most  cases  since,  wars  were,  and  have  been,  supported  by  funds  previously 
accumulated,  or  by  pillage  and  plunder,  and  debts  contracted  were  never 
paid. 

If  our  war  is  one  of  revolution,  no  people  ever  before  conducted  such  a 
•war  as  we  are  conducting  this,  under  the  auspices  of  a  regular  and  consti- 
tutional government.  I,  however,  do  not  propose  to  pay  our  debt  during 
the  war,  but  to  take  advantage  of  the  condition  of  things  which  surround 
us,  pay  as  much  of  it  as  possible,  preventing  its  accumulation  to  a  magni- 
tude beyond  the  ability  or  willingness  of  the  people  to  pay.  For  such  a 
purpose,  we  are  better  situated  than  any  people  who  ever  went  to  war. 
With  an  enterprising,  brave  and  patriotic  population,  with  a  rich  and  pro- 
ductive soil,  we  have,  within  ourselves,  if  energetically  and  properly  de- 
veloped, all  the  elements  of  self-defence  and  self-support.  We  have  also  an 
accumulated  wealth,  as  also  the  productions  for  an  enlarged  and  profitable 
commerce.  But  our  ports  are  closed  by  the  blockade  of  the  enemy,  our 
foreign  and  internal  commerce  destroyed,  except  the  vicious  and  demorali- 


13 

zing  trade  carried  on  by  blockade  runners,  and  criminal  traders  with  the 
enemy.  Our  coasts  are  closed  and  the  payment  of  debts  suspended,  and 
there  is  virtually  no  demand  "for  money.  If  we  are  wise,  we  can  convert 
these  things,  which  we  are  inclined  to  regard  as  great  evils,  into  absolute 
blessings.  By  a  judicious  system  of  taxation  we  can  create  a  new  demand 
for  money,  co-esteusive  with  our  over  supply  of  currency.  In  the  absence 
of  almost  all  other  sources  of  application,  and  the  condition  of  the  currency 
the  people  can  pay  a  vastly  larger  amount  of  taxes  than  they  could  under 
diflFerent  circumstances,  to  be  applied  to  the  extinguishment  of  a  portion  of 
the  public  debt,  and  the  prevention  of  its  aggregate  overgrowth,  thus  re- 
storing the  public  credit  and  the  value  of  the  currency.  There  is  no  difE. 
culty  in  paying  the  fery  highest  taxes  when  there  is  a  super-abundance  of 
money,  and  the  people  have  no  other  use  for  it.  Does  not  prudence,  then, 
dictate  the  levy  of  such  an  amount  of  taxes  as  will  extinguish  a  large  por- 
tion of  our  debt,  re-establish  the  public  credit  and  restore  to  the  people  a 
sound  currency? 

In  order  to  raise  the  largest  possible  sum,  without  detriment  to  the  coun- 
try, the  contributions  hliuuld  be  levied  upon  each  individual  according  to 
his  ability  to  pay,  under  existing  circumstances,  and  with  regard  to  the 
benefits  he  would  realize  from  their  impositions. 

The  President,  in  his  message,  very  correctly  and  justly  says,  "  it  may 
be  added  that,  in  consid(M-ing  this  subject,  the  people  ought  steadily  to  keep 
in  view  that  the  government,  in  contracting  debt,  is  but  their  a-^ent;  that 
its  debt  is  their  debt",  as  tho  currency  is  held  exclusively  by  ourselves,  it  is 
obvious  that,  it  each  person  held  Treasury  notes  in  exact  proportion  to  the 
value  of  his  whole  means,  each  would  owe  himself  the  amoi^t  of  notes 
held  by  him,  and,  were  it  possible  to  distribute  the  currency  among  the 
people  in  this  exact  proportion,  a  tax  levied  on  the  currency  alone,  to  an 
amount  sufficient  to  reduce  it  to  proper  limits,  would  aflford  the  best  of  all 
remedies.'' 

But,  inasmuch  as  the  currency  is  not  so  distributed,  and  we  cannot  adopt 
"  the  best  of  all  remedies,"  a  scheme,  based  upon  tlie  same  principle,  or 
as  nearly  the  same  as  possible,  would,  in  my  judgment,  be  the  next  best 
remedy.  I  venture  the  assertion  that,  upon  admitted  principles  of  politi- 
cal economy,  a  tax  can  be  levied  and  collected  from  the  present  holders  of 
Tieasury  notes  alone,  "  to  an  amount  sufficient  to  reduce  the  currency  to 
proper  limits,"  and  net  cost  the  note-holder  and  tax-payer  one  cent. 

Take  two  kundred  million*  as  the  amount,  or  "proper  limit"  to  the  cur- 
rency, up  to  this  point  it  would  be  at  par,  but  every  dollar  of  increase 
beyond  would  only  swell  iLu  volume,*without  increasing  the  aggregate 
value.  The  currency  of  a  country  cannot  be  made  to  exceed  a  fixed  vi^lue, 
and  when  the  quantity  is  incr^jased  beyond  the  limit  of  par  y\\ve,  the  fact 
is  immediately  indicated  by  a  corresponding  rise  in  property  and  means  of 
living ;  in  other  words,  by  the  depreciation  of  the  currency.  Whatever 
amount  there  may  be  in  <  irculation,  the  whole  cannot  be  made  to  exceed 
the  value  of  the  amount  of  the  limit  of  par  value.  Therefore,  if  two  hun- 
dred millions  is  the  par  value  limit,  the  six  hundred  millions  which  we 
have  in  circulation  is  worth  jnst  that  amount  of  value  and  no  more — that 
is,  the  six  hundred  millions  would  buy  no  more  than  two  hundred  millions 
would  buy.  Now,  if  J  am  correct  in  this  position,  then,  if  the  holders  of 
all  our  Treasury  notes  were  to  make  a  contribution  of  two-thirds  of  the 
amount  held  by  them  respectively,  it  would  reduce  the  circulation  to  two 
hundred  millions,  which  would  still  be  worth  as  much  as  the  six  hundred 
millions  are  now  worth.    The  holders  would  be  compensated  for  their  con- 


14 

tributions  by  the  enhanced  value  of  the  remainder — the  result  would  be 
the  same  if  the  contributions  should  be  enforced  by  taxation.  In  either 
case,  the  holder  would  not  be  able  to  realize  the  magnificent  profits  which 
would  accrue  to  him  under  the  funding  scheme. 

I  have  already  shown  that  it  is  a  mistake  to  suppose  that  two  hundred 
millions  is  the  amount  of  currency  demanded  by  the  business  wants  of  the 
country,  but  that  circumstances  have  reduced  the  demand  to  about  fifty 
millions,  more  or  less,  which  is  at  present  the  true  limit  of  par  value.  If  I  am 
correct  in  that,  the  six  hundred  millions  of  treasui'y  notes  now  in  circulation 
are  worth  but  about  fifty  millions  of  dollars,  par  value.  It  cannot  be  much 
above  or  below  that  amount.  A  system  of  taxation  can  be  devised,  as  I 
believe,  which  will  levy  its  contributions  upon  each  individual  citizen 
according  to  his  ability  to  pay,  under  existing  circumstances,  and  with  a 
due  regard  to  the  benefits  he  would  realize  from  their  imposition,  which 
would  produce  over  four  hundred  millions  of  dollars,  without  producing 
pressure,  and  which  would  restore  the  currency  to  par  value  and  re-estab- 
lish the  public  credit. 

The  scheme  proposed  by  the  resolution  which  I  have  had  the  honor  to 
introduce,  would,  i  verily  believe,  if  adopted  and  faithfully  executed,  pro- 
duce those  results.     This  scheme  proposes : 

1.  A  tax  of  fifty  per  cent,  upon  all  the  outstanding  Treasury  notes  on 
the  first  of  January  next,  known  as  general  currency.  This  item  would 
produce  §5284,316,399 — without  reducing  the  value  of  the  money  held  by 
the  tax  payer  a  particle ;  the  remainder,  as  I  have  shown,  would  be  worth 
as  much  as  the  whole.  Instead  of  being  injured,  the  holder  of  Confederate 
notes  would  be  largely  compensated,  by  the  enlarged  demand  created  by 
imposition  of  the  proposed  taxes  upon  other  persons. 

2.  The  tax  on  the  other  currency,  such  as  interest  bearing  notes,  &c., 
would  be  affected  in  the  same  mode.  Of  this  class  of  currency,  there  ia 
$162,814,720,  upon  which  a  tax  of  twenty-five  per  cent,  would  yield 
$40,703,68k\  The  taxes  arising  upon  tlie  funded  debt,  and  treasury  notes 
deposited  to  be  funded,  would  amount  to  $61,891,360.  From  the  holders 
of  the  public  debt  alone,  who  would  not  be  injured,  but  greatly  bene- 
fitted, the  taxes  would  amount  to  fiSBG, 911,439.  A  tax  should  be  laid 
upon  every  other  interest,  graded  as  circumstances  shall  warrant.  This, 
without  having  a  basis  for  an  estimate,  I  suppose  would  produce  at  least 
eio-bty  millions  more,  which  would  give  for  the  next  year  the  enormous 
anm  of  $466,711,439.  And  yet  this  amount  could  be  paid,  without  pro- 
ducing any  great  pressure.  Large  as  it  appears,  it  is  really  but  about 
$33,000,000. 

The  holders  of  treasury  notes,  as  I  have  shown,  would  lose  nothing  by 
surrendering  up  half  their  nutes,  for  the  balance  would  be  of  the  same  real 
value  as  the  whole  were — but  the  imposition  of  one  hundred  and  eighty 
milfions  of  taxes  upon  other  interests,  would  so  enlarge  the  demand,  or 
extend  the  limit  of  par  value,  as  to  make  what  remains  worth  at  least  six 
times  as  much  as  the  whole  was  worth  before.  The  bond  holders  and 
holders  of  interest  bearing  currency,  would  be  compensated  in  the  same 
manner  by  the  appreciation  in  value  of  their  securities.  All  other  classes 
would  be  compensated  by  the  reduced  price  of  all  the  means  of  living. 
The  burthen  would  scarcely  be  felt,  except  in  the  great  advantages  that 
would  be  realized  by  all  classes  of  the  people  and  the  Government. 

The  advantage  to  the  Government  would  be  vast.  Supposing  the  taxes 
of  the  present  year  will  amount  to  one  hundred  and  twenty  millions,  these, 
added  to  those  proposed,  will  discharge  over  six  hundred  millions^  of 
the  public  debt— over  one  half— reduce  the  currency  in  circulation 
to  about  one  hundred  millions— and  completely  re-establish  the  credit  of 
the  Government. 


15 

There  are  but  two  fundamental  principles  upon  which  the  subject  under 
consideration  can  be  effected — funding  and  taxation.  All  our  financial 
schemes  must  be  based  upon  one  or  the  other  of  these  principles. 

Let  us  now  compare,  or  rather  contrast  the  scheme  of  the  Secretai-y  of 
the  Treasury  and  my  own.  His  is  based  upon  the  funding  principle  ;  mine 
upon  the  principle  of  taxation.  His  proposes  to  restore  the  currency'*by 
funding  it  in  sis  per  cent,  bonds.  Mine  would  re-establish  the  public 
credit  by  paying  the  pubJic  debt.  His  would  create  a.  debt  of  eleven 
hundred  millions,  bearing  an  annual  interest  of  sixty-sis  millions.  Mine 
would  reduce  the  public  debt  below  six  hundred  millions. 

The  same  striking  difference  exists  in  regard  to  details.  He  would  fund 
the  depreciated  currency  in  order  to  improve  it.  I  would  stop  funding  in 
order  to  raise  the  largest  amount  possible  of  taxes,  taking  advantage  of  the 
depreciation.  After  exhausting  the  supply  by  funding,  he  would  create  a 
demand  for  two  hundred  and  forty  millions  of  dollars  in  par  funds — which 
would  produce  pressure,  panic  and  bankruptcy,  with  both  the  people  and 
the  Government.  I  would  take  advantage  of  the  redundant  circulation,  and 
levy  between  four  and  five  hundred  millions  of  taxes,  worth  really  less 
than  $35,000,000,  which  could  be  paid  without  being  felt  otherwise"^  than 
in  a  restored  public  credit  and  currency,  in  the  enhanced  value  of  public 
securities,  and  the  reduced  prices  of  all  the  necessaries  of  life.  He  would 
levy  an  ad  valorem  tax  upon  the  property  of  the  whole  country,  with  dis- 
criminations in  favor  of  the  banker,  the  speculator  and  extortioner,  giving 
no  credit  to  the  agriculturist  whose  property  is  already  charged  with  the 
tax  in  kind.  I  would  levy  a  discriminating  tax  upon  money,  incomes, 
salaries,  &c.,  in  accordance  with  the  Act  of  I860,  imposing  the  burdens 
upon  those  best  able  to  bear  them,  most  of  whom  would  be  benefitted  by 
their  imposition. 

If  Senators  will  bestow  the  same  patient  investigation  upon  the  scheme 
of  the  Secretary  of  the  Treasury,  and  the  same  care  in  analyzing  it  that  I 
have,  I  am  confident  they  will  discover  all  the  obnoxious  features  and 
objections  to  it  that  I  have  enumerated,  and  will  not  hesitate  in  coming  to 
the  conclusion,  that  its  adoption  would  be  ruinous  to  the  country. 

I  propose  to  insert  a  stipulation  in  Treasury  notes,  of  "  the  new  and  im- 
proved issue,"  as  a  means  of  keeping  them  at  par.  The  speculator  should 
be  deprived  of  all  temptation  to  depreciate  the  public  credit,  and  it  should  be 
made  his  interest  to  sustain  the  currency.  This  is  the  secret  of  that  astonishing 
fact  for  which  so  many  have  tried  to  account  for  in  vain  :  the  ability  of  the 
United  States  Government  to  sustain  its  currency.  The  money  capital  there 
is  controlled  and  governed  by  one  great  central  head,  the  bankers  and 
brokers  of  Wall  street.  The  capitalists  there  are  the  owners ;  Government 
and  State  stocks,  manufacturing,  shipping  and  railroad  stocks,  and  real 
estate  in  the  large  cities — all  are  dependent  for  value  upou  their  success  in 
the  war  against  us.  It  is  to  the  interest  of  the  capitalists  to  sustain  the 
Government,  and  hence  they  work  in  harmony  with  it.  The  depreciation 
of  their  currency  is  from  actual  want  of  confidence  ;  and  the  depreciation 
would  be  much  greater,  if  the  want  of  confidence  was  not  counterbalanced 
by  the  interest  of  capital.  As  I  have  shown,  the  depreciation  of  ours  has 
not  resulted  from  a  want  of  confidence,  but  mainly  from  the  causes  which 
I  have  assigned.  We  have  no  greater  money  centre,  nor  are  our  finances 
and  currency  controlled  by  a  central  head.  Our  capitalists  have  specu- 
lated in  our  currency  with  a  view  to  depreciate  it.  Its  depreciation  is 
regarded  by  our  enemies  as  evidence  of  tire  declining  confidence  of  our 
people  in  our  success,  in  the  great  struggle  in  which  we  are  engaged.  The 
restoration  ofthe  public  credit,  by  wise  and  judicious  measures,  will  be 
•worth  as  much  to  us  as  a  victory  in  the  field.  The  elevation  of  our  credit, 
evidenced  by  an  improved  currency,  will  be  the  signal  for  the  decline 


x> 


16 

of  thglrs.  And  when  theirs  shall  decline  much  below  what  it  is  at 
present,  notwithstanding  the  capital  bands  with  which  it  is  compressed,  an 
explosion  will  take  place,  as  startling  and  destructive  as  the  sudden  erup- 
tion of  a  volcano. 

After  the  restoration  of  our  currency,  all  causes  tending  to  its  depreci- 
ation should  be  removed.  By  inserting  the  stipulation  in  the  note,  that  it 
shall  be  receivable  in  payment  of  taxes  and  other  public  dues,  at  its  cur- 
rent value,  the  speculator  is  deprived  of  interest  to  tempt  him  to  depreciate 
the  currency.  It  will,  on  the  contrary,  be  to  his  interest  to  sustain  it,  for 
instead  of  making  he  loses  by  its  depreciation. 

This  matter  has  been  tested,  and  its  efficiency  was  verified  by  the  experi- 
ment. In  1842,  Texas  Treasury  notes  were  as  much  depreciated  as  ours 
are  now.  A  new  issue  was  made  containing  the  foregoing  stipulation. 
The  bills  depreciated  slightly  within  the  first  few  months  after  their  issue, 
yet  they  rallied,  came  up  to  par,  and  subsequently  maintained  that  value. 

The  value  of  the  second  stipulation  is  self-evident.  It  gives  to  the 
Secretary  of  the  Treasury  a  perfect  control  over  the  amount  of  the  circu- 
lation of  Treasury  notes.  It  gives  him  ample  power  to  keep  the  amount  of 
circulation  within  proper  limits,  by  funding  to  prevent  depreciation.  _ 

Mr.  President,  we  must  not  come  to  a  wrong  conclusion  upon  this  sub- 
ject; the  consequences  would  be  terrible.  Our  constituents  are  looking 
■with  anxious  interest  to  the  action  of  Congress,  not  only  upon  this,  but 
upon  other  measures  of  vast  import  which  demand  our  attention.  A  greater 
or  more  fearful  responsibility  never  devolved  upon  any  body  of  men  than 
now  rests  upon  us.  We  have  in  our  keeping  the  lives,  liberty  and  property 
of  millions  of  freemen.  The  patriot  of  every  land  is  looking  with  trem- 
bling anxiety  upon  this  the  greatest  struggle  in  the  world's  history,  for  the 
vindication  of  man's  right  to  self-government.  We  must  come  up  to  the 
magnitude  of  the  crisis. 

If  we  fail  in  this  our  great  struggle,  it  will  not  be  for  want  of  bravery 
on  the  part  of  our  armies,  whose  courage  has  been  exhibited  on  more  than 
a  hundred  bloody  fields,  but  from  other  causes.  Let  it  not  be  from  the  folly 
of  our  counsels. 

After  we  shall  have  done  all  that  the  interest  of  our  country  demands  ot 
us  here,  let  us  then  go  home  to  our  constituents,  and  rekindle  the  fires  ot 
patriotism  that  burned  so  brightly  in  their  bosoms  in  1861,  but  which  have 
been  nearly  quenched — by  what  causes  I  will  not  say.  Let  us  revive  our 
energies  and  renew  our  efforts  with  the  determination  to  suffer  every  thing 
rather  than  failure.  As  to  final  success,  there  should  be  no  doubt,  for  our 
cause  is  right,  our  people  are  brave,  and  God  is  just. 

It  is  true  that  my  heart  has  sometimes  been  made  to  sink  by  the  harshness 
of  some  of  our  legislation,  by  the  domineering  conduct  of  military  authority, 
destructive  of  the  enthusiastic  patriotism  of  our  people,  and  .especially  by 
our  failures  to  gather  the  fruits  of  victories,  in  following  up  and  crushing  the 
defeated  and  discomfited  foe.  01  Mr.  Ppesident,  had  the  signal  victory  of 
Chickamauga  been  followed — had  our  army  been  reinforced  to  the  extent  that 
we  had  the  right  to  suppose  that  of  the  enemy  would  be,  this  day  joy  and  exul- 
tation would  fill  our  land— gloom  and  despair  would  enshroud  our  foee. 
The  enemy  was  reinforced — our  army  was  detached  and  weakened — and  a 
shameful  defeat  followed. 

Nevertheless,  I  have  never  had  one  despondent  doubt  of  our  final  triumph. 
I  may  be  regarded  as  over  sanguine ;  if  so,  it  is  because  of  my  tempera- 
ment, strengthened  by  my  hdfcits  of  life.  From  my  earliest  years  I  have 
had  difficulties  to  encounter,  with  no  aids  to  overcome  them  but  self-reliance 
and  perseverance.  I  have,  therefore,  been  taught  to  believe-  that  a  deter- 
mined will,  energy  and  perseverance,  will  accomplish  anything  not  inhibited 
by  the  fiat  of  Omnipotence, 


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